Big Oil's Free Market

By Douglas V. Gibbs

A Friend of mine owns a small oil company in Texas. Dean stays in touch with me via Facebook and YouTube. He tells me that even though he has a very small company, the liberal left even considers him "big oil." The fact is, however, the myth of big oil is not what the leftist liberal Democrats make it out to be.

The image we are supposed to conjure up when the Democrats complain about "big oil" is this big fat tycoon sitting back in his E-Z chair smoking a big fat cigar that he just lit with a hundred dollar bill. He's greedy, and could care less about the high gas prices, because for him, that just means more profit.

The image, however, is not true in most cases. Besides, isn't success a part of the American Dream? Isn't achieving your wildest dreams the hopes of every American? Isn't that what the land of opportunity is all about? Why is it we dream of success, but once we see big success, we wish to demonize it, and hit it with punitive government actions?

Liberals tell me things like, "When is enough money enough?" or "They became rich on the backs of the poor," or "The average Joe isn't benefiting from the greed of those big corporate giants."

In fact, just because of the fact that the oil companies have opportunities for tax breaks as an incentive for being a business, some even jump to the conclusions that government is practicing corporate welfare with these companies.

Corporate welfare, or crony capitalism as some call it, takes its roots from mercantilism. Mercantilism was an economic practice employed by the British before the American Revolution that limited all business goings-on to only dealing with the British, and a system where the government gave preferential treatment for those businesses that played ball with the government. A similar system went into place in Italy during the fascist regime approaching World War II, where heavy regulations controlled the private industries as severely as the communists controlled theirs, but in Italy, it was done under the guise that the private companies remained in private hands - therefore the fascists claimed they were the opposite of communism, which later led to the erroneous belief that fascism is a system that inhabits the right side of the political spectrum - when in reality, it shares the left side of the political spectrum with monarchies, dictatorships, communist regimes, and other totalitarian regimes that use big government to control the private sector, and the populace.

The bailouts and subsidies so fondly used by the Democrats mirror the dealings fascism had with their own industries. Corporate welfare, and crony capitalism, with Wall Street giants, various banks and automakers, as well as credit companies, is the system being employed by the Democrats. . . as they accuse the GOP of wanting to do so with companies such as those labeled "big oil."

So yes, corporate welfare and crony capitalism is alive and well in the United States, but the mercantilists are the members of the liberal left.

In reality, big oil is not in the hands of a few powerful men with big cigars and ill intentions. Big oil is in the hands of the American People.

A report in 2007 by Sonecon shows that big oil's corporate management owns only 1.5 percent of the U.S. oil and natural gas industry. The rest is owned by tens of millions of Americans through retirement accounts (14 percent) and pension funds (26 percent). Mutual funds or other firms account for 29.5 percent ownership and individual investors own 23 percent of oil stock holdings.

Institutional investors hold the remaining 5 percent.

Therefore, it seems reasonable to assume that the federal government unconstitutionally hammering the oil companies with fines, taxes, and heavy regulations actually hurts the American People because not only will government intrusion into the industry, as the Democrats are currently attempting, drive up the cost of gasoline, and the prices of other petroleum products, but it also would lower the earnings of all of those retirement accounts Americans have invested in oil.

As for the profits made by U.S. oil and natural gas companies that have been cited by congressional Democrats as reason to end tax incentives for the industry, John Felmy, chief economist with the American Petroleum Institute, put those earnings in perspective when it comes to high gasoline prices: “If you took 100 percent of the earnings of the oil industry, you’d save 30 cents on the gallon,” Felmy said.

But the myth of the big oil fat cats goes even deeper than that. When compared to other American industries, the profit margins for the oil and natural gas industry are considered to be mid-range, or 5.7 percent for each dollar, according to 2010 U.S. Census Bureau data.

What Americans are paying for at the pump is not incredible profits for a bunch of fat cat oil executives, but taxes (14% goes to excise taxes alone) and the cost of the crude oil before it gets to the gas refineries, in addition to the normal cost of doing business, which includes refining and retailing and excessive costs created by the attempt to comply with the incredible amount of unnecessary regulations.

Democrats don't tell you these things, because they have to create enemies to fight against, and if you knew the truth, you would realize that it is not big oil that is filled with greedy, uncaring, elitist pigs. Those porkers are actually the political elite, which consists mostly of Democrats.

-- Political Pistachio Conservative News and Commentary

Who Owns ‘Big Oil'? Not Who You Think - CNS News